Cuphead and his brother Mugman are two fun-loving kids who live under the watchful eye of Elder Kettle. Against the elder's warnings, the brothers wander into the Devil's Casino and play craps. When the brothers go on a winning streak, the casino's manager King Dice calls upon the Devil, who raises the stakes. If Cuphead and Mugman can win another time, they will own the entire casino; if not, the Devil will have their souls. Cuphead rolls snake eyes and he and Mugman must give up their souls. The brothers beg for mercy, so the Devil makes a deal with them: collect the contracts of his runaway debtors who have also lost their souls by midnight the next day, and he might let them off the hook. They visit Elder Kettle, who gives them a potion that allows them to fire blasts from their fingers to aid in their quest.

The brothers travel around Inkwell Isle, earning soul contracts from residents who have lost their souls to King Dice and the Devil. Eventually, Elder Kettle tells the brothers that when facing the Devil again, they must "do the right thing". Once they make it back to the Casino, King Dice reveals that he too lost a bet, presumably about whether or not Cuphead and Mugman would be able to retrieve the contracts. He fights the two only to lose. The Devil then asks for the contracts and in return they will "join his team". At this point the player can choose whether to hand the contracts over or not. If they say yes, the Devil turns Cuphead and Mugman into his demonic lackeys and the game ends. If they say no, the Devil then battles the brothers in retaliation for them telling him the whole deal is off. After defeating the Devil, the brothers toss the soul contracts in the flames and race home. They tell the residents that they are no longer under control of the Devil and they all cheer the brothers for their heroic deed.